The Stoxx Europe 600 index
SXXP, -0.64%
finished below the key 300 level at 298.91, a 0.2% drop for the day that left it with a weekly decline of 0.3%. The index closed 0.5% lower a day earlier as investors fretted about economic growth in China and a downbeat set of earnings from some big companies. See video: Europe’s Week Ahead

The global backdrop provided little support, with U.S. markets failing to sustain a bounce after an upbeat reading on consumer sentiment. Stocks in Japan sank 3% as exporters fell on a strong yen.

Glaxo scandal a boon for Beijing

(3:37)

Here’s one take-away from the bribery scandal GlaxoSmithKline is weathering in China: In Glaxo’s anguish, there’s solace for the Chinese consumer. Photo: AP

“European markets are trading cautiously because traders are not willing to place better bets ahead of the FOMC [Federal Open Market Committee] meeting” next week, said Naeem Aslam, chief market analyst at Ava Trade, in emailed comments.

“This is despite the fact that Bernanke may deliver another well statement on Wednesday and may keep the current pace of the asset purchase,” said Aslam. “However, the market is also very much used to an idea of surviving without the stimulus help, but it is the earnings results which has dampened the mood in Europe.”

There was a little bit of earnings cheer on Friday. Pearson PLC
PSON, -1.96%
shares jumped 6.2%. The publisher said it swung to a first-half loss as it continues to restructure its business. The company said in trading terms, 2013 has begun as expected.

Friday also marks the one-year anniversary of a promise by European Central Bank President Mario Draghi to do “whatever it takes” to preserve the euro. In an interview with Handelsblatt newspaper, former ECB chief economist Jurgen Stark warned that the crisis will likely come to a head in late autumn and France could be the next to require use of the ECB’s bond-buying Outright Monetary Transactions program. Read: Here’s how things look a year after Mario Draghi pledged “whatever it takes” to save the euro.

Analysts at Credit Suisse upgraded the banking sector to overweight from benchmark, citing “clear signs” of macro improvement in the euro area and attractive valuations. European banks, the analysts noted, are trading at a near-record 42% price/tangible book versus U.S. banks. That ratio refers to the price of a security versus its value, excluding intangible assets.

Shares of HSBC fell 0.4% in London, but in Paris, BNP Paribas rose 0.8% and Société Générale traded flat. The French CAC 40 index
PX1, -0.98%
shook off the weaker trend across Europe to gain 0.3%, ending at 3,968.84.

The index was buoyed as LVMH Moët Hennessy Louis Vuitton
MC, -0.21%
rose 3.6%. The luxury goods group reported a day earlier that organic growth in the second quarter rose 0.9%, accelerating from the first period.

Also in that sector, shares of Kering SA
KER, -1.65%
rose nearly 4%. The owner of the Gucci label said sales growth for its luxury unit rose 6% in the second quarter, from 4.5% in the prior quarter.

The German DAX 30 index
DAX, -0.99%
meanwhile, fell 0.7% to 8,244.91. Autos led decliners, with Daimler AG
DAI, -0.77%
down 2.3%. Concerns about Chinese growth have been weighing on growth stocks this week.

Also down, shares of heavyweight Seadrill Ltd.
SDRL, -1.82%
fell 1.6% after HSBC cut it to neutral from overweight.

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